On January 16, 2016, the United States and the European Union (“EU”) significantly eased their sanctions against Iran, following verification by the International Atomic Energy Agency (“IAEA”) that Iran had carried out its commitments under the Joint Comprehensive Plan of Action (“JCPOA”), the multilateral agreement signed in mid-July 2015 in which Iran agreed to accept certain limitations on its nuclear program.

Specifically, the United States dramatically reduced—but did not altogether eliminate—its “secondary” sanctions, which target non-U.S. companies not owned or controlled by U.S. persons that engage in certain activities in or involving Iran.  In contrast, and as expected, the “primary” U.S. sanctions that prohibit U.S. persons and their owned or controlled non-U.S. affiliates from engaging in virtually any dealings with Iran (absent U.S. government licensing) will remain in place.  Significantly, however, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued general licenses and a statement of licensing policy that ease certain aspects of these “primary” U.S. sanctions.

Most notably, OFAC issued a general license that broadly authorizes non-U.S. companies owned or controlled by U.S. persons to trade and otherwise deal with Iran, subject to certain continuing restrictions on the involvement of U.S. persons and the provision of U.S.-regulated goods and technologies.  The OFAC general license also authorizes U.S. persons to engage in activities related to the establishment or alteration of policies and procedures of a U.S. company or its owned or controlled non-U.S. subsidiaries to the extent necessary to allow the non-U.S. subsidiaries to engage in otherwise newly permissible dealings with Iran.  The general license also permits U.S. parent companies to make available to their non-U.S. subsidiaries certain automated and globally integrated information technology systems necessary to process documents or information related to the non-U.S. subsidiaries’ permissible Iran-related dealings.

Additionally, consistent with the JCPOA, the United States removed more than 400 Iranian individuals and entities from its various sanctions lists, including the List of Specially Designated Nationals and Blocked Persons (“SDN List”).  As a general matter, U.S. persons and their owned or controlled non-U.S. subsidiaries still cannot deal with parties that remain on the SDN List (or entities owned 50% or more, individually or in the aggregate, by one or more SDNs) absent U.S. government licensing, and dealings with SDNs also may give rise to the imposition of various secondary sanctions that remain in place.

Further, on January 17, in a move underscoring that the sanctions relief implemented pursuant to the JCPOA was related only to Iran’s decision to curtail key aspects of its nuclear program, OFAC designated 11 individuals and entities involved in procurement on behalf of Iran’s ballistic missile programs.  These new designations come in the wake of ballistic missile tests conducted by Iran in October and November 2015.

Finally, as expected, the EU has eased its Iran sanctions program to a much more substantial extent than the United States.  Although a number of key EU restrictions remain in place, the EU has now removed most of its Iran sanctions program, including asset freezing measures against a number of major Iranian financial institutions and oil/gas companies, energy sector investment and related trade controls restrictions, notification / authorization requirements for certain transfers of funds to or from Iranian parties, and prohibitions against the provision of insurance and other financial services to Iranian parties.